I am the founder of agency search consulting firm, AVIDAN STRATEGIES. I have more than 30 years of leadership experience with top global Madison Avenue agencies, managing iconic brands for companies like Procter & Gamble, Kraft Foods, Bristol-Myers, General Motors, Pfizer, Mars, The Wall Street Journal,Sprint and Coca-Cola. During the course of my career I advanced to become a Managing Partner of WPP's Berlin Cameron/Red Cell, EVP and head of business development for Saatchi & Saatchi, the first Global Executive Director Havas advertising, and EVP account management at Y&R. I served on the global board of directors of Havas advertising and the North America Executive Committee of Saatchi & Saatchi. During my leadership tenure both Berlin Cameron and Havas, respectively, were named "Agency of the Year" multiple times. I am a native of Israel, a former army officer, and a Columbia MBA. You can reach me at avi@avidanstrategies.com

Maker's Mark's Plain Dumb Move Proved To Be Pure Marketing Genius

Sales of Maker’s Mark bourbon, known for its distinctive red wax seal, soared 44 percent in the first quarter, its best ever, after the distillery announced in mid-February that it plans to water down its own product and lower the proof due to shortage of raw materials. That led to a revolt among loyal customers, but whereas people usually boycott a product when they are not happy, Maker’s announcement turned out to boost sales. Customers started hoarding what they were led to believe were to be the last 90-proof Maker’s bourbon bottles.

The firestorm that the announcement caused led Maker’s to sober up. As thousands took to social-media to complain about the change to Maker’s, the company reversed the decision a week after the news broke.

“You spoke. We listened. And we’re sincerely sorry we let you down,” the distiller wrote on its FacebookFacebook page Feb. 17. Nearly 28,000 people clicked a “like”, praising the decision.

Companies of course tend to crow about product reformulations, but that is often the case when they improve the formulation, not diminish it. However, when it comes to marketing, scare tactics seem to work. The public relations fiasco turned out to be a boon for Maker’s Mark, offsetting some decline in parent Jim Beam’s other spirits.

Beam isn’t the first company to face a backlash when tinkering with a beloved product. In 1985, devotees of Coke were enraged when Coca-ColaCoca-Cola Co. introduced a reformulated beverage called New Coke. Less than three months after what some called “the biggest marketing fiasco ever”, Coke went back to its original formula, rechristened “Coca-Cola Classic”, marketed side by side with New Coke.

In a bit of spin, Coca-Cola eventually claimed that both formulas actually increased their share of the cola market, and some conspiracy theorists even insinuated that this was actually a brilliant, secret strategy intended to regain loyalty of Coca Cola drinks that have been switching to Pepsi.

Is it possible that Maker’s blunder was premeditated?

That would have been pretty dumb. For starters, it would have been too risky, bordering on a death wish. No one could have predicted that their customers would rush out and hoard on the bourbon. And in the age of social media it was entirely predictable that customers would revolt vociferously.

So therefore, the company might have been brazen enough or foolish enough to actually consider cheapening their product as a viable business strategy, but I don’t believe that the announcement about watering down the bourbon was premeditated, just dumb.

In some ways Maker’s learned what many companies have to grapple with today: they really don’t own their brands anymore, the customer does. They just rent them.

Avi Dan is the founder of Avidan Strategies, a marketing consulting firm that specializes in business and marketing advice, agency search, compensation, and advertising strategy. He spent 30 years in senior management and board positions with leading global agencies.

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This was so obviously going to be a marketing disaster from the time that they announced it. I’m surprised that somehow it turned out well for the brand. Marketing campaign execution should be handled delicately but Maker’s Mark was clumsy and alienating, and it miraculously didn’t destroy what they had worked hard to create.

Beam luckily slid by this near disaster actually reaping some benefit when the dust settled. But as to the question if this whole sequence of events was premeditated … the answer to that is, “NO IT WAS NOT!” Top executives genuinely were looking to cheapen the product in order to further maximize profitability without regard to customer satisfaction or loyalty. This isn’t surprising though when you have a foreign CEO in charge who knows nothing about the bourbon industry, its history and what it really means to be called the true “American Spirit”. On the inside, talk to any of the “Seasoned Veterans” (well those of them whom are left, they all seem be flocking to the door for employment with the competitors) but for the ones that remain, they all seem to be shaking their heads in disbelief at decisions being made by the eager young MBA’s fresh out of accounting school and the effects it’s having on the company. This exodus in knowledge in turn puts even more pressure on the company by back-filling with people no experience in the bourbon / distilling industry, if the position is even back-filled at all, leaving people doing the jobs once staffed by two or three people. On the outside, Beam actually does a pretty good job of giving the general public a sense of an old rustic, laid back feeling of gently aging it’s bourbon in quiet hillside rack houses and that nothing is ever rushed. On this, I give a 9.5 out of 10. Point is…never rely on outer appearances because what lies within surely will surface tomorrow.

I just got paid $6784 working off my laptop this month. I was shocked when my neighbor told me she was averaging $95 p/h, and she convinced me to try. I can’t believe how easy it was once I tried it out. The potential with this is endless. This is what I do, Rich4.COM_

While I love Forbes CMO column, is there anything else your contributors can write about beyond the Makers Mark event? I think it has been written about at least 15 times in the past 3 months in some form or fashion. And, can writing be done by actual marketers rather than “consultants and strategists” who have great logos on their company websites but no actual work in the past year on actual brands? The only thing to find on Avi Dan’s website as evidence of work is article after article ABOUT brands, not actual successful work ON brands. (I’m sure cases are buried somewhere in that clumsy website).

Finally, while I don’t know all the ins and outs of the Maker’s Mark situation, “clumsy” would not be what I would call it. I would likely call it flexible, adept, empathetic and values driven when you look at it in its entirety. Had they stopped at the first move, then it could be debated.

To the guy who commented “marketing disaster” did he look at the sales figures in the article? Remember, real marketers look at “actual purchases” vs. the consultant’s “purchase intent”.

Chase, I don’t think that there were as many stories as you imagine. And anyway, this story is different. It’s about the brand surging as reported by quarterly results that just cam out. If you read my bio you’ll see that I worked ON brands for about 30 years BTW.

I read your articles and am surprised that you think it was not premeditated. I own many bourbon’s and have a cocktail lounge dedicated to classic cocktails, American food and feature over 250 hard to find and fine American Bourbon (and Rye). With Bourbon (and Rye) as popular and in as high demand that it is right now, it was a brilliant move to make by Beam Global and Makers Mark. The demand is there and the risk of a discontinuation of another bourbon is a very in demand type of market for many of us consumers and collectors. The volume of Maker’s at Costco, Safeway and like off premise retailers made it obvious that there was not a true shortage dating back to last year. The marketing behind a discontinuation would only at worst, continue with normal sales. And Beam knows this. 4 – 6 Years is normal for Whiskies nowadays, with the ultra aged American juice really being the only true scarcity. Even though Makers is not one, most LDI brands are 2 to 10 years old! And those are readily available and being distributed under every brand under the sun. Maker’s Mark did not make a high risk premeditated marketing decision, they made a brilliant one that drove consumers, collector’s and bar/restaurant owners running to their local retailer and distributor. Thank you for the continued great columns. BTW Maker’s Mark….can you please re-release the Black Label Makers that went to the far east market?

A few years ago there was a “viral” release/hoax…whatever from Jack Daniels that had a similar effect. The statement was that the spring used as the source of JD’s whiskey in Lynchburg would run dry sometime that year. The news led to massive sales and stockpiling of old No.7. The bad news is that is a one trick pony.

While the the episode had a fortuitous outcome ( for the near term) for the Marker’s Mark brand, it strains credulity (and understanding of branding strategy) to call it “smart” if one holds a long term view. Testing brand loyalty with a “cry wolf” tactic for the short term demand-based price price due to scarcity and fear can only erode confidence in a brand in the longer term. And it will open up gaps for competitive entry because brand loyalists will sooner or later feel played—even betrayed. I think this event is most likely a sign of an executive rank who really doesn’t grasp brand strategy and shoots from the hip more than an indication of cleverness or good brand strategy. They dodged the bullet this time but they’d better keep their heads down in the future as they as not likely to be so lucky again. Brand loyalty is like an exceptionally aged bourbon—there is only some much to go around and you don’t want to swill it.

This is similar to what Victoria Bitter (VB) experienced in Australia. Carlton United Breweries (CUB), the brewers of VB decided to reduce the alcohol content of the beer to reduce excise tax and keep the beer affordable for consumers. CUB maintained that even with the reduced alcohol content of the beer there was no impact upon the flavour of the product. After making the change VB slipped from the highest selling beer in Australia. After almost three years CUB apologised to consumers and changed VB back to the original alcohol content. During the relaunch of the product, CUB also used their original marketing message for VB. The response from consumers was overwhelming and VB was able to regain the position of Australia’s number one selling beer.

This is not the first time people have blundered into greatness. Spain sponsored Columbus, because of their ignorance about the circumference of the earth. The Spanish monarchy believed Columbus’ claim that one could get to the Far East by sailing West. The Portuguese were expert navigators and knew that Columbus was wrong. So Spain’s ignorance led them to sponsoring Columbus and becoming a world empire through their discoveries. So yes people do dumb things, but sometimes blunder forward.